How to start investing as a UK expat

This communication is for informational purposes only and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, they are subject to change and we are not responsible for any errors or omissions.

Living abroad can present a unique opportunity to start investing – especially if your income is high and your living costs are low compared to the UK (e.g. Italy, Greece and Spain). However, how do you start investing as a British expat? 

Below, our Murcia-based financial advisers at Scottsdale share some ideas about how to get started with your investment journey. We highlight some areas of opportunity to explore with a professional as well as risks to watch out for.

We hope this content is helpful. If you want to discuss your financial plan with us, please get in touch to arrange a no-obligation financial consultation, at our expense:

+34 966 460 407


Set clear goals

Why do you want to start investing? Having a clear idea of what you want to achieve will give you a clear target to work towards, helping you to set realistic expectations. 

Remember, with real investing, there is hardly ever a “get rich quick” option. Rather, slow and steady progress towards growing wealth, over the long term, is more attainable. 

For instance, perhaps you want to build up a retirement fund over the next twenty years or so. Here, what kind of average annual growth might be realistic? Or, maybe you want to build an investment portfolio which generates an additional “passive” income stream.

These two example goals will typically require different approaches to portfolio construction and management. A financial adviser can help you work through your goals and identify realistic goals in light of your circumstances and prospects.


Identify your risk tolerance

Each investment carries its own risk level and potential for generating returns. You need to ensure that you are comfortable with your investment choices. Otherwise, you risk losing out later – e.g. “panic selling” your shares which have temporarily dropped in value.

As humans, it can be difficult to be honest with ourselves about our risk tolerance. Perhaps we think we are “braver” or more “cautious” than we truly are. Often, we do not know which questions to ask ourselves to identify our true risk tolerance.

This is where working with a financial adviser can be invaluable. Here at Scottsdale, for instance, we often help UK expats in Murcia and around Spain in this process of discerning personal attitudes to risk. As your “risk profile” is put together, this helps to inform your portfolio choices.

For example, if you are highly “risk averse” in your investment approach, then you may want to focus more on “safer” (less volatile) assets such as government bonds. However, if you are comfortable with a lot of market volatility to try and attain long-term growth, then prioritising shares in your portfolio may be a more suitable approach.

There is no “right” attitude to risk. Everyone is different. Your risk tolerance may be different to that of a family member, friend or colleague and that’s alright. 


Diversify your investments

Suppose you invest all of your money into a single company. What happens if that company fails? To avoid the risk of losing it all, you could instead spread your money out across 100s – even 1,000s – of companies. That way, if a single company fails, the other ones can help to maintain and grow your wealth.

This is called “diversification”. You can spread out your risk even more by diversifying across different assets, markets and geographic regions. Therefore, if there is a downturn in a specific sector or region, your portfolio better weather the market turbulence.


Navigate fees and taxes

For a UK-based investor, it is important to be mindful of potential investment fees and UK taxes that might affect your real investment returns. For an expat, this can be more complicated as you navigate extra challenges such as local tax laws and currency exchange.

One important area to mention is ISAs (individual savings accounts). For UK residents, you can save or invest up to £20,000 into your account(s) each tax year and generate tax-free interest, capital gains and dividends. However, if you move abroad, you cannot contribute to your ISAs after the tax year that you relocated.

Please note that you can still keep your old ISA(s) open and still receive UK tax relief on money and investments held inside, but any gains will be taxed in Spain either annually or when you withdraw funds dependent on the type of ISA you hold.

Investing in an old UK pension could be an option for UK expats. You can still claim tax relief on contributions up to £3,600 a year for five tax years after moving abroad. However, make sure that you will not need the money until you are aged 55 (or, 57 after 2028), as you typically cannot access UK pension benefits before your Normal Minimum Pension Age (NMPA).

For UK expats based in Murcia and other parts of Spain, bear in mind that bank interest and other investment income must be declared once it passes the €1,600 threshold. Speak with us to explore the best ways to build a tax-efficient, cost-effective portfolio as a UK expat.


Conclusion & invitation

If you are interested in discussing your own financial plan or investment strategy with us, please get in touch to arrange a no-commitment financial consultation at our expense:

+34 966 460 407


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